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Customer Experience Model: Social Environment, Retail Brand and Positive
WOM
Article in Research in Business and Management · August 2014
DOI: 10.5296/rbm.v2i1.5823
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Research in Business and Management
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2015, Vol. 2, No. 1
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Customer Experience Model: Social Environment,
Retail Brand and Positive WOM
Erna Andajani (Corresponding Author)
Doctoral Candidate in Management Post Graduate Program
Faculty of Economics and Business, Brawijaya University, Malang, Indonesia
Lecturer Faculty of Business and Economics, Surabaya University
Raya kalirungkut Street, Surabaya-60293, East Java, Indonesia
Tel: 62-899-388-3705. Email: ernajani@ubaya.ac.id, worldnot2013@gmail.com
Djumilah Hadiwidjojo
Faculty of Economics and Business, Brawijaya University, Malang,Indonesia
Veteran Malang Street, Malang 65145, Indonesia
E-mail: Djumilah@ub.ac.id
Mintarti Rahayu
E-mail: mintarti@ub.ac.id
Djumahir
E-mail: djumahir@ub.ac.id, djumahir@gmail.com
Received: June 19, 2014 Accepted: July 21, 2014 Published: August 17, 2014
doi:10.5296/rbm.v2i1.5823 URL: http://dx.doi.org/10.5296/rbm.v2i1.5823

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Abstract
Competitive advantage today can be achieved not only through selling the products or
services to consumers, but also emphasizing the creation of customer experience. On the
other hand, the company does not merely orient to customer satisfaction as customer
satisfaction will stagnate at some points. Companies need to find new formulations to retain
their customers by creating customer experience. The customer experience can occur through
the stimulations which some are controllable whereas some others are uncontrollable by the
company. Social environment and retail brand image can influence the creation of customer
experience. Unpleasant emotions experienced by customers will support their positive WOM.
Customers who spread positive WOM tend to be loyal to the company. This article provides
some ideas related to retail companies in retaining their customers through the creation of
customer experience.
Keyword: customer experience, social environment, retail brand, positive WOM
1. Introduction
In facing increasing competition, every company should try to find the right business strategy
to win the competition. In this case, marketing strategy is the focal point of the company's
business strategy. All companies utilize marketing strategy in delivering their products (goods
and services) offering to meet what consumers demand and expect. Marketing strategy
development today requires companies to create a unique characteristic of the products and
services offered to its customers. According to Kotler (2002) distinctive factor or
differentiation factor can be a tool for the company to win the competition as well as a source
of competitive advantage. Through the differentiation factor, customers will get easier to
recognize and remember the products and services offered by the company.
Marketing strategy for the service product is different from goods. Service characteristics
which are intangible and perishable make service difficult to be evaluated before consumers
consume (Lovelock & Wirtz, 2010). Lovelock and Wirtz (2010) state that determining the
quality of service is more difficult, both before and after purchase since service is intangible.
In the process of service delivery, service providers and buyers must meet which then the
service delivery process occurs. There are three things to be considered in marketing strategy
including process of services delivery, reliability of service providers during service delivery,
and tangible facilities that come along with the service delivery process. Therefore, the
process of delivering service products is more complex than tangible goods.
Pine and Gilmore (1999) demonstrate (see the appendix, Table 1.1) that changes in the
characteristics of products and services occur in line with the growth of the economy over
time. Starting from the type of commodities in the era of agricultural economy during XVII
to XVIII centuries, the characteristics of product and service during that time are:
commodities were offered were based on the basic functions of the goods, it could not be
distinguished from one to another, merchants sold goods in large packs, and the prices
depended on the demand and supply of the market. In the industrial era during the middle of
19th
century, factories used machinery to increase productivity. This utilization of machinery
caused those factories capable of producing more goods in particular standard as well as they
started to build their inventory.
Technological innovation that occurred gradually during production process resulted in
greater efficiency of goods production since it was replaced by better machinery. This
phenomenon led to the reduction on the number of labor force that was needed in the
production process. Along with the decrease on the needs of labor force in the manufacturing
sector, there was an increase on the service market (during late 19th century); thus, it

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enhanced the need on the workers for service sector. Companies used service as the
differentiating factor in facing and winning the competition during that era. Service is
intangible activity and tailored to meet customer’s wants. Service providers deliver services
when customer needs. Several companies combined between products and services in their
offering. Later on, more and more companies are doing similar things so that the
distinguishing factor among companies becomes less distinct.
In twentieth century, it emerges different output requirement from prior era. The
differentiating factor by combining goods and services is no longer applicable for XX century.
Companies should look for other type of distinctive factors that are difficult for competitors
to imitate. The recent identification to distinguish one firm from another is by offering an
experience. Experience occurs when a company uses its services as a mean of delivering
products and goods to bond individual customers. Commodities are seen as the basic function
of the product; yet goods and service are compared based on their tangibility and intangibility;
and, experience is a memory (memorable). Buyers will gain experience, for instance, when
they enjoy a game at Disneyland. Pine and Gilmore (1999) state that two people at the same
moment will not acquire similar experience, since every experience that occurs derived from
the interaction between the company and each individual.
Company’s competitive advantage derived from differentiating factor by creating a delightful
experience for the customer is one of the powerful marketing strategies nowadays. Shaw
(2007) mentions that the creation of customer experience gets more and more advanced and
become the standard in business. According to Consumer Experience survey by Temkin
Group in Q1 of 2011 in the United States, it showed that there were 27 American companies
which had conducted survey on customer experience. Amazon.com company is able to
achieve the highest customer experience score by attaining 81% (excellent). There are 16
American companies (Kohl's, Costco, Lowe's, Sam's Club, BJs Wholesale Club, Walgreen's,
Old Navy, Target, Rite Aid, JC Penney, Wal-Mart, CVS, Macy's, Home Depot, Sears) that get
customer experience creation score higher than 70% (experiencematters.wordpress.com).
This suggests that experience creates a unique value to the customer, difficult to be imitated
by competitors, and provide a strong effect on satisfaction, loyalty and recommendations
behavior of the consumers (Berry, Carbone, & Haeckel, 2002; Pine & Gilmore, 1999).
The concept of customer experience emerged in several disciplines (Wall et al., 2011:11). In
the perspective of sociology and psychology, peak experience is a real subjectivity, very
attractive, rich and complete experience that has been experienced by a person (Thorne,
quoted in Wall et al., 2011:11). From the perspective of anthropology and ethnology,
experience means a medium to deliver culture on individuals through an event that is realized
by those individuals themselves (Caru & Cova, 2003) and others, society and the world
(Abrahams, quoted in Wall et al., 2011:11). Pine and Gilmore (1999) states that successful
experience occurs when consumers get something unique, memorable, continuous, eager to
repeat and build upon, as well as make consumers enthusiastic to do WOM. Schmitt (1999)
perceives from economic and marketing perspective that experience is personal; it is an
individual response that occurs to some stimuli and involvement in particular setting or
background. Marketers should offer facilities and environment in order to create the desired
customer experience. Lewis and Chambers (2000) quoted in Wall et al. (2011:11) define
customer experience as the total implication of the combination of environmental, goods and
services bought by the customer.
The concept of customer experience itself has been discussed in several studies. Holbrook &
Hirschmann (1982) and Babin et al. (1994) have stated that consumption has experiential
aspect. Schmitt (1999) in his book describes how companies create experiential marketing so

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that customers can recognize through their senses, feeling, thinking, action, and correlate
those things to the company and the brand. Berry, Carbone, and Haeckel (2002) show in
handling competition, a firm should provide complete facilities to encourage purchasing
process to occur so that the customers get satisfying experience. Puccinelli et al. (2008)
mention that experience occurs at the every stage of the consumer decision process. Palmer
(2010) exhibits a conceptual framework that can shape customer experience. Customer
experience management is the key to create a successful customer relationship management.
Verhoef et al. (2009:31) state that there are several publications in journals and books on
customer experience realm in the context of managerial actions and its practical implication
(Berry, Carbone, & Haeckel, 2002; Meyer & Schwager, 2007; Shaw & Ivens, 2005); yet,
theoretical review which underlies the supporting factor and the consequence of experience
customer itself is not yet widely explored.
The description of the following studies indicates the contributing factors and consequences
of customer experience as stated by Verhoef et al. (2009:31). Gentile et al. (2007); Sheng and
Teo (2012) explain that hedonic value and utilitarian value are the antecedents of customer
experience. Sheng and Teo (2012) conclude that customer experience results in brand equity.
Naylor et al. (2008) demonstrate the influence of advertising on hedonic experiences,
symbolic and functional functions. Grewal et al. (2009) present a research conceptual
framework which experience becomes the antecedents and consequences. The antecedents
intended by the research framework of Grewal et al. (2009) consist of promotion, price,
merchandise, supply chain, place, and macro environment. The result of the Grewal’s et al.
research framework (2009) finds that customer experience is derived from marketing
performance and financial performance. Hsu and Tsou (2011) state that the factor which
contributes to the consumer experience is the credibility of information. Nasermoadeli et al.
(2013) mention that social environment affects the sensory experience, emotional experience
and societal experience. Gopalan and Narayan (2010), Klaus and Maklan (2011) and
Ferguson et al. (2012) emphasize on the consequences of customer experience to WOM.
Verhoef et al. (2009) present a model related to how to create customer experience (see Fig.1)
based on a literature review of previous studies. Contributing factors in the model of
customer experience creation from Verhoef et al. (2009) includes the supporting factors that
can be controlled and cannot be controlled company. The model of customer experience
creation by Verhoef et al. (2009) consists of 9 contributing factors suitable for retail. The nine
variables are: the social environment, self-service technology, retail atmosphere, assortment,
price, customer experience in alternative channels, retail brand and customer experience (t-1)
and two moderating variables including situation and consumer. The concept of customer
experience creation model combines controllable contributing factors such as self-service
technology, retail atmosphere, assortment, price, customer experience in alternative channels,
retail brand, and customer experience (t-1) as well as uncontrollable contributing factor
which is social environment factor.
Consumer experience creation model by Verhoef et al. (2009) exhibits a complete comparison
among the contributing factors compared to Gentile et al. (2007), Naylor et al. (2008),
Grewal et al. (2009), Hsu and Tsou (2011), Sheng and Teo (2012), Nasermoadeli et al. (2013)
models which have been described above. Verhoef et al. (2009) proposes a holistic customer
experience construct and involves cognitive, affective, emotional and physical response
aspects for retail business. Verhoef et al. (2009) also present a gap for further research to
empirically examine the two variables, namely social environment and the retail brand
variables. The other variables such as self-service technology, retail atmosphere, assortment,
price, customer experience in alternative channels, customer experience (t-1) and customer

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experience management strategy are not recommended for further study because those have
been explored in prior studies (Neslin et al., 2006; Dorotic, Verhoef, & Bijmolt, 2008,
Ailawadi et al., 2009; Kopalle et al., 2009; Mantrala et al., 2009 as adapted from Verhoef et
al., 2009).
Based on the description above, there is an interesting theme to be explored regarding to
customer experience. This study examines the contributing factors and consequences of
customer experience that is not yet widely discussed. The contributing factors to customer
experience are researched and empirically tested a model by referring to the model of
customer experience creation by Verhoef et al. (2009), particularly for the recommended
variables: social environment variables and retail brand variables. Customer experience
creation model by Verhoef et al. (2009) does not discuss the consequences of the customer
experience itself. This study also modifies Verhoef’s et al. (2009) model of customer
experience creation by adding customer experience’s consequence namely WOM variable.
The social environment described by Verhoef et al. (2009) includes the interaction between
consumers and employees, as well as the interactions among consumers in a community.
Verhoef et al. (2009) state that the interaction between consumers influences the experience
of each consumer. For instance, when a consumer A feels annoyed by the loud voice of
consumer B at a cinema, consumer C asks B to calm down his voice. It will affect the
experience of each consumer. Employee interaction with customers occurs when a transaction
takes place. The attitude of employees in delivering services will have an impact on the
customer experience. A community or a group in a society can provide information to
members of the group /the community which then have an impact on the experience attained
by its members.
Nasermoadeli et al. (2013) analyze the direct relationship between the social environment
with customer experience as sensory experience, emotional experience and societal
experience. The results show that social environment significantly influences the sensory
experience. Nasermoadeli et al. (2013) research supports the concept of customer experience
creation model by Verhoef et al. (2009) regarding the relationship between social
environment and customer experience.
Retail brand variable is interesting to study because each retailer has a unique retail brand or
the private label. Ailawadi and Keller (2004) state that retail is an ideal place to create
customer experience. Customer experience not only involves the retailer brand or trademarks
of the manufacturers but the whole of retail. Retail brand will also describe the significance
of the retail brand meaning in the mind of consumers be able to create customer experience.
Fitzsimons et al. (2008) conclude that exposure to brand influences consumer perceptions on
the brand. Consumer perception will influence consumer behavior. Consumer behavior
reflects the experience received and perceived by the consumers. Fitzsimons et al. (2008)
give an example of Apple brand exposure which is perceived to be more creative than IBM
brand exposure. Therefore, it concludes that consumer perception of a brand will affect the
experience that will be gained. Based on this description, the Verhoef’s et al. (2009) model
concludes that retail brand is the factors which contributes the creation of customer
experience.
Retail with famous brand has an advantage every day from its loyal consumers as those
consumers go shopping for goods and services at the retail store. Consumers expect that they
will be better served than in particular store compared to the competitor. The value-added
perception of the customers is attained through brand image which is offered and this
becomes a tool to win the competition nowadays. Martenson (2007) proposes that consumers

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who have tried the store brand will result in potential effect on store image; but it is more
likely that the store image affects the willingness of consumers to try the store brand. It
means store image can affect a consumer to visit the store.
Measurements retail brands used in this study is based on the brand image concept.
Consumers will achieve the description of the consumer product when it is initialized by the
brand image. This study uses retail brand image measurement concept (Ailawadi & Keller,
2004) since it is explicitly adjusted to Verhoef’s et al. (2009) the concept of customer
experience creation model for retail.
Wardah Fazriyati (2012) explains mall reflects the lifestyle among urban society as well as a
place to shop; further, mall is also a gathering, meeting, and recreation place with mates,
friends, family, relatives, and colleagues. Several activities can also be held at a mall such as
exhibitions, competitions, fashion shows, and so on (Kompas.com). Markplus Insight survey
on malls in 2012 emphasizes on the two main points, namely physical facilities and
hospitality (non-physical aspect) of the mall’s staffs when they interact with visitors. The
physical aspect includes the conditions around the shopping mall, work environment at the
helpdesk (customer service), parking lot, atrium, visual merchandising, elevators and
escalators for visitors, ATM centers, green areas, signage, room for nursing mothers, places of
worship, toilet, children's playground, and a food court area. For hospitality aspect, it
includes the evaluation of mall visitors on the safety, customer service counters, janitors,
elevator attendants, parking attendants, toilet attendants, and food court attendants. Based on
the description above, it shows that customers who visit the mall will get a number of
benefits and involved in physical activities that will build an experience during spending their
time at the mall. Those aspects do not exist in a self-service technology.
Service marketing strategy will be more effective if it is done through WOM communication.
Consumers who have experienced the service will be easier to do WOM communication.
Consumers will have a greater trust when the service information is delivered by other
consumers who have got the services from former experience. Based on previous research,
there are a lot of factors that influence WOM such as trusts (Augustus and Rossi, 2008),
loyalty (Augustus & Rossi, 2008; Roy, Butaney, & Bhutaney, 2009; Sohail, 2012;
Bahri-Ammari, 2012), quality (Ennew, Banerjee, & Li, 2000; Augustus & Rosii, 2008; Ng,
David, & Dagger, 2011), customer satisfaction (Augustus & Rosii, 2008; Lang, 2011;
Komunda & Osarekhoe, 2012; Ha & Im, 2012; Bahri-Ammari, 2012), customer relationship
(Ennew, Banerjee, & Li, 2000; Dithan, 2009), service recovery (Komunda & Osarekhoe,
2012), as well as commitment and perceived value (Augustus & Rosii, 2008). Research
which uses experience as the antecedent of WOM is still a few; therefore, it is interesting to
observe further.
Gopalan and Narayan (2010), Klaus and Maklan (2011) and Ferguson et al. (2012) observe
different research object but similar service sector – hospital - conclude that experience
significantly influences WOM. The results of those studies confirm the importance of the
consumer experience to encourage WOM in the service sector. Customer experience is an
event which is individual and natural that directly occurs to the customer; thus, experience is
highly possible to influence WOM. Customers will share their experience either intentionally
or unintentionally to others. Affirmed by Solomon (2011), word-of-mouth communication
(WOM) is a powerful tool to be used when consumers are not familiar with the product
category.
WOM is an interpersonal communication between two or more individuals such as among
the members of a reference group or between consumers and sales force (Assael, 1995). A

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positive WOM phenomenon that occurs among consumers cannot happen inevitably without
the role of the company or service provider. The company provides all facilities and products
which meet the needs and expectation of consumers. The company expects that by offering
better product and services, it will result in positive WOM communication among consumers.
Katz and Lazarsfeld in Assael (1995:635) state that WOM is two-times more effective than
radio advertising. WOM is four-times more effective than sales force. WOM also is
seven-times more effective than newspapers and magazines. Satisfied consumers will do
positive WOM (Sweeney et al., 2012; Ha & Im, 2012). When positive WOM happens, the
company will attain greater benefits. The Company will acquire new customers without
going establishing costly marketing communication effort. The product image of the
company gets increased through positive WOM. The company also will get greater revenue
from its new consumers. Further, consumers will have higher trust become loyal due to
positive WOM (Zeithaml, 2009: 550).
Kasali (2003), says that Indonesian society is in habit of spreading news by WOM;
Indonesian uses their verbal communication more frequent than use their hands to write or
use their sight to read. The form of word of mouth communication which comes from
satisfied customer can be a recommendation for other potential consumers, an encouragement
to other consumers to do business with particular service providers (Zeithmal, 1996).
Marketers can encourage positive WOM communication of a product through new product
information and positive publicity about the product. Positive WOM can occur through
personal joyful experience of consumers (Assael, 1998). WOM communication is mostly
important for the reference group since it can be a source of information and an influence.
WOM communication is very important for a product that can be identified through style,
taste and other norms. WOM can occur for products that have been introduced already by
company but not yet got consumer’s attention.
The purpose of this study refine the research gap which is suggested by Verhoef et al. (2009)
for making empirical testing on customer experience creation model. Empirical test is
conducted on the contributing factors which cannot be controlled by company namely social
environment variables with customer experience. Empirical test is also run to the contributing
factors that can be controlled namely retail brand company. Social environment and retail
brand variables are still rarely explored; further, it also aims to prove and support the concept
of Verhoef’s et al. (2009) customer experience creation model. This study also modifies
Verhoef’s et al. (2009) customer experience creation model by adding positive WOM
variable. .
Theoretically, this research can enrich knowledge, especially in marketing realm regarding
consumer decision-making concept. The topic of customer experience has not been widely
discussed as a research topic, particularly in Indonesia which has different characteristics of
consumers compared to consumers in other countries. The selected research object of retail
business is based on the Verhoef’s et al., (2009) research recommendation.
2. Literature Review
Levy et al. (2012) define retailing as a set of business activities that add value to the products
and services sold to consumers for personal or family use. Based on the definition of retailing
above, it can be concluded that the concept of mall is a group of retails in a single building unit.
The group of retail can be a set of retails which sell products in store, services, sales via the
internet, direct selling, and sales via catalog.
In general, shopping center, or shopping mall can be described as a collection of diverse

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varieties of goods and services and are arranged strategically to draw the attention of
consumers (Agustina, 2005). The shopping mall is a place where there are various shops that
can meet all the needs of society, ranging from the primary, secondary, and tertiary needs. At
shopping mall, people can shop, walk around, and enjoy the entertainment, banking, dining,
and various other activities. Shopping mall becomes a place of recreation and a place to spend
leisure time which is important for today's society, especially for those living in big cities.
Mall in such description is known as "one-stop shopping mall", which is a mall that provides
everything so that visitors do not need to go anywhere else. Visitors can shop, play, and spend
leisure time; thus, mall becomes an important element in modern urban society lifestyle labeled
as "a cultural phenomenon" (Agustina, 2005).
2.1 Customer Experience
The concept of customer experience was initially emerged in the middle of 1980’s, along
with the mainstream of consumer behavior literature that considers customer as rational
decision makers. A new approach explains that experience as the origin of consumer behavior
(Holbrook & Hirschman, 1982).
Hedonic term implies that customer experience focuses on customer attitudes such as surprise,
delight, and excitement (Oliver et al., 1997). In the hedonistic perspective, customer implies a
non-linear effect when the first stimulus is much perceived for its to-date or first impression;
however, the next stimulus is less perceived for lack of to-date impression. . The role of emotion
as a distinguishing feature of customer experience and the stimuli which generate positive effect
to a consumer may generate negative affect for other consumers (Oliver et al., 1997).
The concept of customer experience is more relevant Experiential Economics by Pine and
Gilmore (1999). The authors present experience as an offering on the new economy which
emerges after commodity. Experience is called as economic value development. In this case, it
arises emerges a term namely memorable' in every stage of the event. Company does not sell
experience (Pine & Gilmore, 1999); yet, company gives artifacts and acceptable experience
context that can be done well by consumers to make their experience and uniqueness.
Broader definition of customer experience is emphasized on the hedonic aspect which is
more varied. The definition of hedonic in customer experience means various stimuli to
create value for customers. The stimulating effect may be in the form of physical control
when having an interaction during delivering service (Grove et al., 1992; Gupta & Vajic,
2000), focusing on customers and expected product design quality (Price, Arnould and Tierney,
1995), service delivery process (Harris et al., 2001), aspiration and brand utilitarian
(Chernatony & McDonald, 2003), as well as relationship support (Gummesson, 1997).
O'Shaughnessy and O'Shaughnessy (2003) note that what can make a person get emotional is
an indication of what they perceive as a very important thing. A new way to approach
customer experience is by considering the concept of consumption as holistic experience
which involves others in every interaction among people and between a person and a
company or a company's offer (LaSalle and Britton, 2003). Contributions that is provided to
create values which exceeds consumer expectations in a good way will result in memorable
experience of the customer with the company (LaSalle & Britton, 2003); in other words,
according to Prahalad and Ramaswamy viewpoint (2004) it will create a unique experience of
the customer with the company.
The various scientific contributions with different interpretations and conceptualizations of
the customer experience offered by several authors results in different perspectives and
numerous proposed models. In general, the core characteristics of the customer experience

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derived from those concepts are:
1. Customer experience has temporal dimension derived from the overall contact points
between customers and a company or between customers and the company's offering
(Addis & Holbrook, 2001; Caru & Cova, 2003, LaSalle & Britton, 2003).
2. Customers experience is very personal and involves different customers regarding their
level of rational, emotional, sensory, physical and spiritual well so that it creates a
holistic gestalt (Schmitt, 1999).
2.2 Social Environment
In a broad definition, social environment includes all of the social interaction between and
around the people (Peter & Olson, 2008, p.258). Consumers can directly interact with others or
observing people or something. Social environment consists of macro and micro social
environment. Macro social environment will influence micro social environment influence
which then affects individual consumer. Macro social environment refers to the indirect
interaction and represent social environment in a very large group of people. Macro social
environment includes culture, sub-culture and social class. All of those three aspects have major
impact on the values, beliefs, attitudes, emotions and behavior of individuals in the group.
Differences that occur in the macro social environment are useful for segmenting the market.
The micro social environment includes face-to-face social interaction among smaller groups
such as family and reference group. Direct social interaction can provide a substantial influence
on consumer knowledge and impressions around a product, store or advertising and
consumption behavior. For example, the influence of the family is continuous and sustained
over several years to adult consumers since they were little will have an impact on purchasing
the same brand, subscribing to the same store and shopping in the same manner as their parents.
The indicators of social environment include: consumer interaction with employees (Baker et
al., 2002), education group and shopping companions (Haytko & Baker, 2004), peer group,
family and group cohesiveness (Lou, 2005), age and reference group (White & Dahl, 2006),
expression of employee’s emotion and customer climate (Lin & Liang, 2011), and a social
community around, friends and acquaintances as well as media instruments (Nasermoadeli et
al., 2013).
2.3 Retail Brand
Brand is name, term, sign, symbol or design, or a combination there of, which is intended to
identify the goods and services of a seller or group of sellers and to differentiate those goods
and services from competitors (Keller, 2008). Based on these definitions, the keys to create
brand is based on the choices of names, logos, symbols, packaging design or other
characteristics that can identify and differentiate the product from other products.
Retail brand is measured by using brand image measurement. Keller (1993) states that brand
image is consumer’s perception and preference for particular brand, which is measured by a
variety of brand associations that are remembered by consumers. Associations are all forms
that reflect the characteristics of the product. Consumers can establish brand associations in a
various ways, such as through direct experience, information, WOM, consumers’s own
assumptions or conclusions about the stigma. Imagery refers to the intangibility aspect of the
brand. Customers may establish imagery directly from the customer experience or indirectly
through advertising or from multiple sources of information such as word of mouth (WOM).
According to the American Marketing Association's definition of a brand Associations in
Ailawadi and Keller (2004), retail brand retailers identify the goods and services and

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distinguish it from competitors. Retail brand, in practice, is different from product brand.
Consumers who utilize the retail brand will take a full and deep experience as retail brand is
more touching to the multi-sensory of the consumers naturally than product brand. Retailers
can also create retail brand image in different ways, such as through a unique association for
service quality, diversity of products, pricing and payment policies and etc.
Perceptions and preferences of consumers in the retail brand image are obtained from retail
brand associations remembered by consumers. Based on the research discussing retail brand
image, retail brand associations can be described through retail environment. Retail
environment includes physical environment, price (Ailawadi & Keller, 2004; Martenson, 2007;
Jara & Cliquet, 2012), promotion (Ailawadi & Keller, 2004), merchandise (Semeijn et al., 2004;
Ailawadi & Keller, 2004; Martenson, 2007; DA Silva & Syed Alwi, 2008) and services
(Semeijn et al., 2004; Ailawadi & Keller, 2004; Martenson, 2007; Jara & Cliquet, 2012). The
physical environment includes physical layout (Semeijn et al., 2004; Da Silva and Syed Alwi,
2008), access, store atmosphere (Ailawadi & Keller, 2004), and neat (Martenson, 2007).
2.4 Word-of-Mouth
Word of mouth is an interpersonal communication between two or more individuals as a
reference group member or between customers and sales force (Assael, 1995).
Recommendation from word of mouth is one of the important factors that influence a
person's decision to buy a product. In the study of Richins and Root-Shaffer in Assael (1995),
they describe three types of WOM communication, among others, due to new products, the
provision of news (response or opinion), and personal experience (comments about the
performance of the product or reasons why consumers buy). WOM communication can be
either significantly positive or negative.
There are several researches which examine WOM variable as the dependent variable.
Ferguson and Paulin (2009), Gopalan and Narayan (2010), Bell et al. (2005) adapted in Ng et
al. (2011), Klaus and Maklan (2011) and Cetin and Dincer (2013) examine the relationship
between experience as the independent variable and WOM as the dependent variable. This
indicates that there is still a few of research which explore the relationship between
experience and WOM. WOM variable that will be examined in this study is the consequence
of the of the customer experience creation model (Verhoef et al., 2009).
3. Proposed Framework
The conceptual framework in this study is based on theoretical studies and empirical studies
on the relationship among social environment, retail brand, customer experience and positive
WOM. The creation of customer experience becomes the attention of many companies
nowadays to win the competition. The customer experience can be created through social
environment and retail brand. A pleasant customer experience will have an impact on the
emergence of positive WOM. Positive WOM will benefit both company and its customers.
Figure 2. Proposed Framework
3
1
2
Social
Environment
Customer
Experience
WOM
positif
Retail
Brand

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35
The direction of the relationship on the research framework is cited from the following
references:
1. Verhoef et al. (2009), Nasermoadeli et al. (2013).
2. Verhoef et al. (2009), Mitchell et al. (2012).
3. Ferguson and Paulin (2009), Gopalan and Narayan (2010), Klaus and Maklan
(2012), Cetin and Dincer (2013).
In the conceptual framework of the relationship between social environment and customer
experience proposed by Verhoef et al. (2009), social environment is not interpreted as role of
the marketer to create a relationship with customers but it is about the strength of the bond
among consumers in a group or family. Social environment is expressed as the interaction
among consumers, between consumer and the employee of a firm, and consumers
observation on advertising or information media of a company. Consumer interactions can
affect other consumers both directly and indirectly. Direct interaction occurs, for example,
when there are customers who talk to other customers or to the employees of a company.
Indirect interaction occurs through the observation of consumers on something, through
observation on attitudes, behavior (gesture) of other consumers or employees of the company
on particular event. The observation will build particular impression which influences the
experience that a consumer receives.. Either positive or negative impression that occurs
depends on the behavioral observations. Observations and interactions that happen during the
process of service delivery will affect consumer experience.
Verhoef et al. (2009) also state that social environment is built from company’s information
addressed to consumers. Company information can be obtained from the mass media
(electronic/non-electronic), group/family and consumer communities to where a consumer
joins. Peter and Olson (2008) also assert that the media includes TV programs, newspapers,
magazines, movies, literature and music. Information can be distributed by consumers
through virtual communities and through face-to-face meeting. Information received by
consumers builds consumer perception which then affects consumer experience.
Nasermoadeli (2013) states that social environment affects the sensory experience of
customers; further, social environment also affects the emotional feedback on the customer
experience. Measurement of social environment variables according to Nasermoadeli (2013)
views, are measured from the surrounding social community, friends and acquaintances as
well as the media instruments (Verhoef et al., 2009). The interaction that occurs in a social
community, friends and acquaintances is an interaction among consumers which will
influence the sensory experience of the consumers. Sensory experience of the customers is
the experience that can be perceived through the five senses (sight, smell, hearing, taste and
touch). Consumers in social communities and observation of consumers in this media will
affect consumers’ sensory to achieve their sensory experience. Through the strength of
consumer’s sensory, it will build the experience of the consumer. Based on the description
above, it leads to the following hypothesis:
Hypothesis 1: Social environment significantly influences customer experience.
Keller (1993:48) states that the basic model of customer-based brand equity (CBBE) concept
proposes that the strength of the brand lies on what customers have learned, felt, seen and
heard about particular brand as the result of customer knowledge from time to time. CBBE
occurs when customers have a high level of awareness and familiarity with the brand.
Customers have the memory of a strong brand association, suitability and uniqueness (Keller,
1993:53). CBBE model is used as a reference for building a strong brand. Building strong

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36
brand is done through 4 stages. In phase 1, it discusses brand salience to measure brand
awareness. Phase 2 is related to brand performance and brand imagery to measure product
performance and brand image associations based on customer experience of the brand. Phase
3 consists of brand judgments and brand feelings that discuss the personal opinions and
feelings of consumers toward the brand. The last stage is brand resonance which illustrates
the psychological aspects of consumer on a brand which encourage brand engagement and
loyalty. Building a brand (Keller, 1993) is a reflection of Aaker’s (1991) brand equity
consisting of 5 components: brand loyalty brand awareness, perceived quality, brand
associations, and other proprietary brand assets.
Grewal, Levy, and Lehmann (2004) say that to understand the role of retail brands on
creating customer experience is important. The use of a brand in a certain period of time will
cause emotional engagement to the brand that a consumer uses. The stronger the emotional
bond formed with the consumer results in stronger perception of the consumer on the brand
(Keller, 2008). Victoria's Secret, Wal-Mart and Best Buy brands are the brands which have
strong emotional bond with their customers. Customers who use the product of the retail
brand will feel that they get something different, proud and excitement. Ambler et al. (2002)
suggest the relationship between brand and experience. The experience is gained when
consumers buy and use the brand. The use of the brand in a certain period of time will
encourage brand equity on the consumers. Brand equity should be managed by a company
through its marketing channels.
The role of a brand to shape brand experience is not only in the form of brand use. Retail brand
implementation can be achieved by arranging customer experience management (Mitchell et al.,
2012). Retail brand can describe the direction and uniqueness that consumers will obtain. In
retail business, retail brand image is built through consumers experience as they visit and shop
at the retail store. The tangibility aspect of retail greatly influences retail brand image. Physical
environment, service, merchandise and price are able to describe retail brand image (Semeijn et
al., 2004; Da Silva and Syed Alwi, 2008; Jara and Cliquet, 2012). Physical environment aspect
includes the tangible facilities in the retail store which affect the transaction process. Service
occurs when consumers visit and make direct transactions. Retail brand image can be perceived
and received through the experience of the consumer himself. In the model of customer
experience creation by Verhoef et al. (2009), it is stated that retail brand is the antecedent of
experience creation. The description above underlies the following hypothesis:
Hypothesis 2: retail brand significantly influences customer experience
Gopalan and Narayan (2010) mention that customer experience will cause positive consumer
behavior if the experience attained by the customer is delighting; on the contrary, it will result
in negative behavior when consumer has unpleasant experience. Positive behavior becomes
as the promoter of positive customer experience with positive WOM communication.
Ferguson et al. (2009) state that the sum of service experience has a positive significant effect
on positive WOM. Klaus and Maklan (2012) find that service experience significantly affects
WOM intentions. Cetin and Dincer (2013) conducted a research on a five-star hotel in
Istanbul found that customer experience has a significant positive effect on customer loyalty
and WOM both partially and simultaneously. It can be concluded that the impact of
experience is WOM. The model of this research framework only discusses the emergence of
WOM. According to Zeithaml (2009:550), the effect of positive WOM is customer loyalty.
This study only discusses the impact of a pleasant experience on the occurrence of positive
WOM. Regarding the description above, it leads to the following hypothesis:
Hypothesis 3: customer experience significant affects positive WOM.

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Tabel 1. Economic Distinctions
Economy
Offering
Commodities Goods Services Experiences
Economic Agrarian Industrial Service Experience
Economic
Function
Extract Make Deliver Stage
Nature of
Offering
Fungible Tangible Intangible Memorable
Key Attribute Natural Standardized Customized Personal
Method of
Supply
Stored in Bulk Inventoried after
production
Delivered on
demand
Revealed over a
duration
Seller Trader Manufacturer Provider Stager
Buyer Market User Client Guest
Factors of
demands
Characteristics Features Benefits Sensations
Source: Pine and Gilmore (1999:6).
Figure 2. Conceptual Model of Customer Experience Creation
Source: Verhoef et al. (2009).
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